The U.S. Democratic Party proposes legislation to restrict prediction markets; Iran airstrike bets spark insider trading controversy

On March 6, U.S. Democratic lawmakers are planning to push for new regulations to strengthen oversight of prediction markets. Recently, bets regarding when the U.S. and Israel would launch airstrikes on Iran have raised widespread concerns about insider trading risks.

Senator Chris Murphy posted a video on social media stating that a person with close ties to the White House placed a “very specific bet” on Friday, betting that the U.S. would take military action against Iran on Saturday. Murphy said such bets could indicate that some participants had early access to sensitive information, allowing them to unfairly profit in prediction markets.

Murphy also warned that if betting on such war events continues, it could pose serious moral risks. He pointed out that if government insiders or related individuals can profit from military action information, it could create a potential incentive to escalate conflicts for profit.

Data shows multiple unusual bets appeared in prediction markets before news of Iran’s escalation. Some newly registered accounts placed bets hours before reports of explosions in Tehran, ultimately making about $1 million in profit. Meanwhile, the total trading volume of contracts related to whether the U.S. would attack Iran has reached approximately $529 million, indicating high market interest in geopolitical event prediction trading.

On the regulatory front, Murphy is working with U.S. Representative Mike Levin to push legislation aimed at tightening oversight of prediction market platforms. Levin stated that if someone profits from insider knowledge of military actions, such behavior is unacceptable both legally and morally.

Levin also noted that U.S. commodity laws already restrict contracts related to war, terrorism, and similar events, but current regulations have loopholes in enforcement, allowing some prediction markets to continue offering such trades.

Analysts believe this controversy may lead the U.S. to further clarify the regulatory boundaries of prediction markets. As geopolitical events become more closely linked to financial markets, discussions around war event prediction trading, insider information use, and market compliance are expected to intensify in the coming period.